This document provides instructions for configuring Service Tax and Education Cess tax conditions and accounts in SAP for reporting in India. Key steps include: 1. Creating new tax conditions for Service Tax and Education Cess 2. Defining new tax posting keys for Service Tax and Education Cess accounts 3. Configuring tax codes, procedures, and pricing to calculate Service Tax and Education Cess amounts and post to the correct general ledger accounts.

1. Service Tax Configuration in India (SD)
Added by Rajesh Banka, last edited by Jyoti Prakash on Dec 01, 2011 (view change)
OBJECTIVE
This document will detail the configuration required on the SD side to enable computation of Service tax
and Education Cess in the output Service order.
PROCEDURE
Initial Steps
Create two new Tax conditions:
JSE4
JES4.
Steps for creation of Tax Condition is illustrated below
Create new condition types
(Transaction OBYZ)
Path: SPRO - Financial Accounting - Financial Accounting Global Settings - Tax on Sales/Purchases - Basic
Settings - Check Calculation Procedure
Select Define Condition Types
Select Condition Type JIN1 and Click on Copy as (F6)
and also provide the Condition type as JSE4 and the Name as "Service Tax".
Select Condition Type JIN5 and Click on Copy as (F6) and give the Condition type as JES4 and the Name
as "ECS on Service Tax".
Outcome
The two tax conditions,

2. one for Service Tax and
the second for Education Cess on Service Tax have now been created.
Create a new tax posting key VS9 and VS0
Path: SPRO - Financial Accounting - Financial Accounting Global Settings - Tax on Sales/Purchases - Basic
Settings - Check and Change Settings for Tax Processing
Select the Processing Key MW1 and Click on Copy as (F6) and give the Key as VS9 and Name as 'India
Service Tax'.
Select the Processing Key MW1 and Click on Copy as (F6) and give the Key as VS0 and Name as 'ECS on
Service Tax'.
Note: If there are multiple service tax registration numbers, you need to have separate account posting
to different GL accounts based on service registration number. This can be done provided a separate tax
code is maintained for each service registration number.
To achieve this you need to define a set of 2 separate G/L accounts for service tax and Education CESS
on service tax respectively, for every service registration number.
In such a case, please activate multiple accounts posting per tax code as follows:
Defining the GL accounts for the Service tax and ECS on Service Tax
Path: SPRO - Financial Accounting - Financial Accounting Global Settings - Tax on Sales/Purchases -
Posting - Define Tax accounts
Go to Details of the Transaction VS9 (Service Tax GL account) and enter the Chart of accounts
Select the Tax Code Check Box if you want to have Tax Code Specific GL accounts or Blank when the
common GL accounts...
Click on Posting Keys
Enter the 40 as Debit and 50 as Credit.
Click on Accounts.
Enter the GL codes
If you have tax code specific GL then enter the tax and GL account.

3. After completing select the VS0 and do the same steps for ECS on Service tax.
A separate account for every tax code can be maintained as follows:
Now maintain different account based on the tax code. Since the tax code will be specific for a plant you
can achieve posting to specific account for a plant.
This should be maintained after configuring the tax procedure
Steps are:
You have to define the required tax codes
Create separate G/L accounts
While creating the posting key, please follow the customizing settings given below:
Path: SPRO - Financial Accounting - Financial Accounting Global Setting - Tax on Sales/Purchase - Basic
Setting - Check Calculation Procedure
Define Procedures:
Select TAXINJ and click on control data.
Click on New Entries and add the following two entries in your system
Add Condition type JSE4 and JES4 respectively at appropriate steps.
Also ensure to maintain the step from for JSE4 & condition JES4 dependent from JSE4
You have to assign the accounting key
VS9 for JSE4 and
VS0 for JES4.
Changes to Tax Code:
Path: SPRO - Financial Accounting - Financial Accounting Global Setting - Tax on sales/Purchase -
Calculation - Define Tax Codes for Sales and Purchases.
Country: IN
Enter the Tax code and Tax jurisdiction Code (If it is applicable in your system). Tax jurisdiction Code is
not applicable for TAXINN.

4. Incase of TAXINJ, maintain Tax Code with appropriate Tax Condition %. Enter the 10% for the Condition
type JSE4 and 2% for JES4. The % have been changed in the budget announced in 2007 to 12 % for
service tax & 3 % for Education Cess.
Changes to Pricing Procedure
Path: SPRO - Sales and Distribution - Basic Functions - Pricing - Pricing Control - Define Condition Types.
Select Condition Type JIN1 and Click on Copy as (F6) and give the Condition type as JSER and the Name
as "Service Tax".
Select Condition Type JIN5 and Click on Copy as (F6) and give the Condition type as JSTE and the Name
as "ECS on Service Tax".
SPRO - Sales and Distribution - Basic Functions - Pricing - Pricing Control - Define and Assign Pricing
Procedure - Maintain Pricing Procedures (V/08)
Select Pricing Procedure JFACT and click on control data & add the new condition at appropriate steps in
the pricing procedure & modify Pricing Procedure calculation as per requirement.
Mark both the condition as Manual and Statistical.
SAP Notes related to Service Tax in India:
SAP NOTE NUMBER DESCRIPTION
Note 1353362 Service Tax Master Note
Note 1391485 Outbound Excise Invoice enhancements for Service Tax
Note 1393506 Service tax enhancements for ARE Reversal process
Note 1392593 Service tax enhancements in Monthly utilization
Note 1393534 Service Category determination & Service tax returns (ST3)
Note 1393460 Update of GAR7 challan information-ST development
Note 1522334 Missing corrections of Service Tax Enhancements
Note 1500389 Change button not enabled in J1IIN utilization screen
Note 1510426 PART2 Entries not generated for excise invoice post-J1IEX

5. Note 1571186 Changes to Service Tax from Indian Union Budget 2011-2012